Shock and frustration filled the headlines after the banking royal commission in Darwin last week, as stories of predatory behaviour by funeral insurance companies, and financial misconduct by ANZ Bank were relayed by emotional witnesses.
While Rowena Orr QC, Senior Counsel assisting the commission, outlined a number of damning findings against the companies, many were left disappointed the commission did not dig deep enough.
Indigenous Consumer Assistance Network (ICAN) CEO, Aaron Davis, told NITV News while he was pleased the commission brought Indigenous financial issues into the public eye, there was much more to be discussed.
“Unfortunately, they only focused on just some of the number of things affecting Indigenous consumers in remote areas,” he said.
“They missed a great opportunity to explore more pressing issues like consumer leases and payday lending.”
Mr Davis said financial councilors across regional Australia are seeing more and more people affected by these types of loans and rent-to-buy-rip-offs, but the issue fell out of the royal commission’s scope.
ICAN has seen an increase in the number of Indigenous Australians shut out of mainstream lending options, as banks have tightened their lending standards over the past decade, which has in turn pushed them to fringe lenders.
The network has been lobbying for restricted standards for small amount credit loans, advocating for more responsible lending practices and level playing field, but Mr Davis said the legislation has stalled.
“We need law reform to stop people getting into serious debt,” he explained.
“ICAN and other consumer advocacy groups continue to try to win cross bipartisan support to get it moving again.”
Investigation into remote ATMs welcomed
Mr Davis did say however, he was pleased with the focus on a lack of fee-free ATMs in remote communities.
“That’s a huge issue in remote areas. Banks are making a lot of money out of those products,” he said.
The commission found many communities had only one ATM in the centre of town, many of which charge fees to simply withdraw cash.
"I was happy to hear this discussed in the commission, and hopefully in time every remote community will have access to a fee-free ATM," Mr Davis said.
"We would like to see an ATM on every Torres Strait Island as well."
‘Judgement day’ for funeral insurance companies
The banking royal commission also highlighted dodgy practices amongst some funeral insurance companies who prey on vulnerable Indigenous families and young customers, including children, using the the cultural significance of sorry business to push unaffordable funeral insurance.
The royal commission heard how The Aboriginal Community Benefit Fund (ACBF), the biggest funeral insurance company catering to Indigenous Australians, had misled customers into thinking they were an Aboriginal business, charged astronomical fees to then fail their obligations to their customers, and their salespeople frequently used 'pushy' tactics.
Ms Orr said the sale of ACBF products and services are not tailored for, benefit or even meet the needs of Aboriginal and Torres Strait Islander people.
"ACBF plays on ... Indigenous mortality statistics to actively sell its policies to children or young people in those communities in circumstances where they have little need for the product," she said.
In response to the shocking revelations, Ms Orr recommended possible criminal charges.
ICAN has been opposing ACBF for over 12 years. Mr Davis said “it is nice to finally see them face their judgement day”.
Insurance company Select AFSL, which also faced intense criticism on the stand in Darwin, may face the prospect of being pursued for criminal charges as well, after providing unlicensed advice to customers.
Ms Orr said at the heart of these companies’ failings were cultural ignorance, remuneration schemes that promoted competition, and inadequate internal policing when an agent breached code.
ANZ Bank also may have broken the law
In closing the commission hearings, Commissioner Kenneth Hayne questioned ANZ Bank’s conduct, asking whether the bank had broken the law by repetitively charging Aboriginal customers informal overdraft fees.
The hearing on Friday was told when customers went more than $50 into the red on their transaction accounts, they could be penalised with 17 per cent interest on the overdrawn amount as well as fee of $6 a day up to a maximum of $60 a month.
The bank was also accused of inadequate promotion of its fee-free basic account, convincing Aboriginal customers to take out more complicated, unnecessary financial products.
Mr Davis said while ANZ was in the firing line last week, every bank needs to rethink the way they approach Indigenous finance and overhaul their current systems.
“It’s not just one bank that’s at fault, it’s across the board,” he said.
“They need to lift their game and have a look at setting up special Indigenous customer assistant services and training.”